TaxTMI 
TaxTMI 
2024 (2) TMI 990
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....ntal Organisation registered since 28.04.2023 as a charitable institution under Sections 12A read with 12AA and 80G of the Act. The assessee claims to have been working for the upliftment of the poor, underprivileged children and women, health, preservation of the environment and other social causes. In order to fulfil its charitable objectives, the assessee receives various grants from the Government as well as the private sector which is exempted from tax under Sections 11 and 12 of the Act. 3. The present writ petition relates to Assessment Year ["AY"] 2017-18. It is the case of the assessee that at no point of time, except for the AY 2017-18 was the charitable status of the assessee doubted by the respondent-Revenue and for all previous AYs, specifically for the AYs 2011-12, 2012-13, 2013-14, and 2015-16, under similar circumstances, exemption under Sections 11 and 12 of the Act was granted to the assessee and even for the subsequent AY i.e., AY 2018-19 as well, similar benefit was extended. However, the benefits for the relevant AY in question have been denied merely on the ground that the donor has deducted tax at source ["TDS"] under Sections 194C and 194J of the Act, whi....
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....o him, it was rightly noticed that the assessee's foundation had earned consultancy fees, contractual receipts etc., in relation to the activities of providing services to the corporate sector. According to learned counsel, even TDS has been deducted on those fees/receipts by the respective entities under Sections 194C/194J of the Act by treating them as professional/contractual fees paid to the assessee. It is, thus, submitted that those receipts cannot be treated to be in the nature of the voluntary contribution of the assessee and accordingly, no interference is called for by this Court. 8. We have heard learned counsel appearing on behalf of the parties and perused the record. 9. A bare perusal of the assessment order dated 22.12.2019 would indicate that for the year in question i.e., AY 2018-19, the assessee's foundation had disclosed total receipts as per the income and expenditure account to the tune of Rs.20,32,12,834/-. The said receipts include receipts amounting to Rs.5,90,42,892/- allegedly in the nature of consultancy fees and contractual receipts which comprise 29.05% of the total income. 10. As per the assessment order, the rationale for describing the recei....
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....iew of the foregoing, there left no room for debate and it is crystal clear that the assessee is hit by the express provisions of 1st proviso to section 2(15) of the Act as it has rendered service in relation to commerce, or business or trade and has received fee/receipts in excess of twenty percent of gross receipts for rendering of services and consequently not eligible for benefits of exemptions of section 11 & 12 of the Act by virtue of operation of section 13(8) of the Income Tax Act 1961. Thus, benefits of exemptions of section 11 & 12 are denied to the assessee and is assessed as normal AOP under chapter IV of the Income Tax Act 1961" 15. The assessee being dissatisfied by the aforesaid order, filed a revision under Section 264(1) of the Act before the revisional authority. In terms of paragraph 2.18 of the revision petition, the assessee had, besides other grounds, set up a specific case that deduction or non-deduction of TDS by some of the donors would not alter the status of the assessee being charitable in character, so long as the activities of the assessee are relatable to a charitable purpose. 16. The revisional authority by the impugned order dated 27.03.2021 d....
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...." 17. At this juncture, it is pertinent to refer to Section 2(15) of the Act which reads as under:- "2. Definitions.-In this Act, unless the context otherwise requires,- ................... [(15) "charitable purpose" includes relief of the poor, education, [yoga,] medical relief, [preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest,] and the advancement of any other object of general public utility: [Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless- (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during....
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....ttracted merely on the basis of deduction of TDS by the donor under a particular head. 22. At this point, it is pertinent to refer to the decision of this Court in the case of Director of Income Tax v. Society for Development Alternatives [2012 SCC OnLine Del 225], where while upholding the decision of Commissioner of Income Tax (Appeals), this Court held that in case of charitable institutions, tied-up grants received from donors if meant to be utilized for charitable purposes and not for other purposes, then those grants are non-taxable and thus, the charitable institutions are eligible to avail the benefits under Sections 11 and 12 of the Act. The relevant paragraphs of the said decision are reproduced herein:- "7. With regard to the second contention, the findings recorded by the tribunal are that the respondent-assessee had received grants for specific purposes/projects from the government, non-government, foreign institutions etc. These grants were to be spent as per the terms and conditions of the project grant. The amount, which remained unspent at the end of the year, got spilled over to the next year and was treated as unspent grant. The Commissioner of Income....
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....peal filed by the Revenue." 23. Notably, in the instant case, it is seen that for the AY 2012-13, the National Institute of Rural Development ["NIRD"] had deducted the highest TDS. However, the assessment order dated 06.03.2014 acknowledged that the receipts of the foundation were utilised for carrying out charitable activities and for fulfilling its objects. The assessee was found to have satisfied the conditions laid down in Sections 11 to 13 of the Act and the total income of the assessee returned at NIL, was accepted. The extract of the assessment order dated 06.03.2014 reads as under: "Assessment Order Return declaring NIL income was filed in this case on 26.09.2012. The case was selected for scrutiny on the basis of guidelines for selection of cases for scrutiny. Notice u/s l43(2) was issued on 08.08.2013 fixing the case for hearing on 26.08.2013 and various dates. In response to the notices u/s l43(2) / l42(l) Sh. Nand Kishore Pandey, CA authorized representative of the. assesses attended the proceedings from time to time, filed the details, submissions and explanations as called for. The books of accounts were examined on test check basis. The ....
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....6 was filed on 28.09.2015, disclosing NIL income. Subsequently, the case was selected for limited scrutiny under CASS and notice u/s l43(2) was issued on 28.07.2016 & duly served upon the assessee. Thereafter, notice u/s l42(1) along with questionnaire was issued, in response to which Shri Nand Kishor Pandey, CA and AR of the assessee trust, attended from time to time and filed details and particulars as requisitioned, which were placed on record. The society is registered u/s 12A of the Income Tax Act, 1961 vide order F. No. DlT(E)/2002-03/A-l544/109 dated 28.04.2003. It is also registered u/s 80G(5)(vi) vide order no. DlT(E) /2011-12/A-l544/2067 dated 10.010.2011. From the details submitted by the assessee, it is seen that the assessee engaged in social development and welfare activities to uplift the poor and underprivileged children, women and youth through programmes health and environment in various states of Indian the receipts of Project are donations for Gail India, WAPCOS Limited, Ministry of Rural Development, Oil and Natural Gas Corporation Ltd etc, to carry out these activity for fulfilling their objects and purpose for all type community. The objects....
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..... Neo Poly Pack (P) Ltd. [2000 SCC OnLine Del 1054], which clearly demonstrates the requirement to follow the principle of consistency in taxation matters. The relevant paragraph of the said decision reads as under:- "6. Having heard Mrs. Prem Lata Bansal, learned counsel for the Revenue, and Mr. Salil Aggarwal, learned counsel for the respondent, we are of the view that no fault can be found with the order of the Tribunal declining to make a reference on the proposed question. It is true that each assessment year being independent of the other, the doctrine of res judicata does not strictly apply to income-tax proceeding's, but where an issue has been considered and decided consistently in a number of earlier assessment years in a particular manner, for the sake of consistency, the same view should continue to prevail in subsequent years unless there is some material change in the facts. In the present case, learned counsel for the Revenue has not been able to point out even a single distinguishing feature in respect of the assessment year in question which could have prompted the Assessing Officer to take a view different from the earlier assessment years, in which t....